Mr. Felicisimo O. Joson

March 8, 1995 Mr. Felicisimo O. Joson Administrator Philippine Overseas Employment Administration POEA Bldg., Ortigas Ave. cor. EDSA, Mandaluyong, 1501 Metro Manila S i r : This refers to your letter of February 8, 1995 requesting opinion whether or not duly organized foundations may be allowed to participate in the overseas recruitment program of the Philippine Overseas Employment Administration (POEA), that is, whether they can be issued a license to operate as overseas recruitment agencies. It is well-settled that a corporation has only such powers as are expressly granted in its charter or in the statutes under which it was created or such powers as are incidental or necessary for the purpose of carrying out its express powers. The pertinent provision of the Corporation Code explicitly provides thus: "SECTION 87. Definition . For the purpose of this Code, a non-stock corporation is one where no part of its income is distributable as dividends to its members, trustees, or officers, subject to the provisions of this Code on dissolution: Provided, That any profit which a non-stock corporation may obtain as an incident to its operation shall, whenever necessary or proper , be used for the furtherance of the purpose or purposes for which the corporation was organized subject to the provisions of this titles." (Emphasis supplied) The Corporation Code further provides: "SECTION 14. Contents of the articles of incorporation . . . . xxx xxx xxx 2. . . . : Provided, that a non-stock corporation may not include a purpose which would change or contradict its nature as such ." (Emphasis supplied) Therefore, as a general rule, a non-stock non-profit corporation is not empowered to venture on profitable business activities . However, as incident to its purpose(s), it may engage in business activities which are reasonably necessary to carry out the purpose(s) for which the corporation was organized . Only such powers which are reasonably necessary to enable a corporation to carry out its express powers and purposes of its creation are to be deemed implied or incidental purposes . (SEC Opinion dated February 18, 1993 addressed to Erlinda B. Ahorro, citing previous SEC opinion and Am. Jur., sec. 740). Activities merely convenient or useful are not implied if they are not essential, having in view the nature and object of incorporation . (Ibid, citing Planters Bank v. Sharp 6 How (VS) 301, 121, ED 447) Thus, a non-stock corporation may venture on profitable business activity only if it is reasonably necessary or essential to carry out the purpose(s) for which it was organized, but unlike stock corporation, any profit that may be derived from such business activities are not distributable to the members, but are used for the furtherance of corporate purposes. Accordingly, in determining whether a foundation can engage in recruitment activities, reference must be made to the purpose clause provision in its articles of incorporation, and unless the power to carry out such activity is expressly conferred in the articles of incorporation or by existing law or is incidental, necessary or essential to carry out the express objectives as appearing in its articles of incorporation, it cannot participate in the overseas recruitment program of the POEA. cdlex Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman